When a Change in Depreciation Method Occurs

question 40

Multiple Choice

When a change in depreciation method occurs

• A) prior years' financial statements should be changed to reflect the newly adopted method.
• B) the change should be reported in current and future years.
• C) the cumulative effect of the change should be reflected on the income statement as of the beginning of the next year.
• D) the cumulative effect of the change in accounting principle should be classified as an extraordinary item on the income statement.

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Definitions:

High-dividend Stocks

High-dividend stocks are shares issued by companies that return a relatively high percentage of their profits to shareholders in the form of dividends.

Personal Income Tax

A tax levied by governments on individuals or households based on their income, with the rate often varying based on income levels.

Dividend Payout Rate

A measure of the percentage of earnings a company pays to its shareholders in the form of dividends.

High Dividend

Refers to stocks or securities that pay out significant portions of profit in the form of dividends compared to their stock price.